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TMI Blog2015 (10) TMI 2309X X X X Extracts X X X X X X X X Extracts X X X X ..... sioner (Appeals) is to be accepted or that by the Tribunal is to be accepted, cannot in any manner be said to give rise to a question of law, much less, a substantial question of law, so as to warrant interference. - Decided against revenue. - Tax Appeal No. 527 of 2015, Tax Appeal No. 528 of 2015 - - - Dated:- 7-9-2015 - Harsha Devani And A. G. Uraizee, JJ. For the Appellant : Mr Sudhir M Mehta, Adv ORDER ( Per : Honourable Ms. Justice Harsha Devani ) 1. By these appeals under section 260A of the Income Tax Act, 1961 (hereinafter referred to as the Act ), the appellant revenue has challenged the common order dated 9.1.2015 passed by the Income Tax Appellate Tribunal D Bench, Ahmedabad in ITA No.1568/Ahd/2010 and ITA No. 1937/Ahd/2010 by proposing the following questions stated to be substantial questions of law : TAX APPEAL No.527 of 2015. Whether the decision of ITAT is perverse in dismissing the appeal of the revenue where the CIT(A) has restricted the addition upto 10% i.e. ₹ 42,07,397/- instead of addition of ₹ 4,20,73,972/- made by AO of unaccounted sales, despite the fact that AO has clearly noted that assessee has debited all the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ida Silk Mills and Rameshwar Silk Mills Ltd. for the last two years. The employees of the assessee company, by their respective statements during the course of survey, had confirmed that they had given cheques to Shri Jaikumar and in turn received cash, which was returned to Shri Sudhrania. The Assessing Officer, after analysis of the material on record, estimated the percentage of proportionate discount at 10.87%, which amounted to ₹ 51,41,203/- and granted deduction accordingly out of the total unaccounted process charges. Accordingly, an amount of ₹ 4,20,73,972/- came to be added to the total income of the assessee company. The assessee carried the matter in appeal before the Commissioner (Appeals), who directed the Assessing Officer to estimate the income at 10% of ₹ 4,20,73,972/- and sustained the addition of ₹ 42,07,397/-. Both the assessee as well as the revenue went in appeal before the Tribunal against the order passed by the Commissioner (Appeals). The Tribunal vide impugned order dismissed the appeal preferred by the revenue and partly allowed the appeal preferred by the assessee by further restricting the gross profit at 6.50%, as against 10% as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #8377; 4,20,73,972/-. As regards the claim of the assessee on other counts, the Assessing Officer was of the view that such expenses had already been claimed in the assessee s books and hence, no further expenses could be allowed. Accordingly, the book results came to be determined by increasing the profit by an amount of ₹ 4,20,73,972/-. 7. In the appeal preferred by the assessee, the Commissioner (Appeals) was of the view that during the course of survey, the evidences found and impounded related to both, accounted and unaccounted transactions which were recorded systematically in the form of books of accounts maintained on the Laptop and, therefore, could not be ignored. The Commissioner (Appeals) noted that the Assessing Officer had treated the entire additional turnover of ₹ 4,72,05,175/- as net income of the assessee and granted deduction on estimated basis for discount granted by the assessee for the reason that the entries for discount were reflected in job charges receipt. However, at the same time, the entries of all other expenses as claimed to be unaccounted were also reflected in the accounts maintained by the Director on his Laptop for all unaccounted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... go upto 23% which was definitely a distorted result looking to the present profit of the assessee concern. Considering the past trend of loss, the margin of profit in the earlier year and the large volume of turnover and also the possibility that some expenses might have been incorporated in the regular books of accounts, the Commissioner (Appeals) was of the view that the profit margin from the unaccounted additional turnover should be on the higher side as compared to the margin shown in the regular books of accounts due to which it could be safely assumed that the assessee must have earned at least 10% of the gross margin of the additional turnover which was almost double the normal gross margin as reflected in the regular books of accounts. He, accordingly, directed the Assessing Officer to estimate the income at 10% of ₹ 4,20,73,972/- and sustained the addition to the extent of ₹ 42,07,397/- as against the addition of ₹ 4,20,73,972/- made by the Assessing Officer. 8. The Tribunal, after considering the material on record, has recorded that the Assessing Officer had accepted the expenses shown in regular books as correct and had only taken receipt from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concerned, as can be seen from the findings recorded by the Tribunal, the Tribunal has merely applied the principles laid down by this court in the case of CIT v. Samir Synthetics Mill (supra) as well as CIT v. President Industries (supra) wherein it was held that the entire sales cannot be added as income of the assessee but addition can be made only to the extent of estimated profits embedded in the sales and that the income from suppressed sales should be determined by assessing the gross profit of the assessee, to the facts of the present case. 11. Insofar as the assessee s appeal is concerned, from the facts noted hereinabove, it is evident that the Commissioner (Appeals) had estimated the gross profit at 10%, whereas the Tribunal having regard to the gross profit of the previous year, which was 5.22% and which had been accepted by the revenue has, on the very same material, estimated the gross profit at 6.50%, which is higher than the gross profit accepted by the Department in relation to the previous year. Nonetheless, both, the Commissioner (Appeals) as well as the Tribunal, have resorted to estimation for the purpose of computing the gross profit. Thus, ultimately the ..... 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